DHL 2001 Annual Report Download - page 151

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Consolidated Financial Statements
Notes
151
Management of the market risk of positions not
allocated to the trading portfolio is based on their
risk content in various portfolios, and not on an indi-
vidual product basis. This operational management
is based on present value concepts that also include
the use of derivatives in the portfolios.
42.2 Risks and fair values of financial instruments
in other Deutsche Post World Net companies
•Risks
Deutsche Post World Net uses derivatives to manage
liquidity, currency and interest rate risks. They are
used exclusively together with a hedged item.The
transactions are recorded in a treasury risk manage-
ment program and valued regularly. Trading, moni-
toring and settlement are separate functions.
Derivatives are traded exclusively with prime-
rated German and foreign banks. The credit rating
of counterparties is reviewed regularly and a trad-
ing limit is fixed.
IAS 39 was applied for the first time to fiscal year
2001.All hedging instruments and hedged items
were measured in accordance with IAS 39 and rec-
ognized in the consolidated financial statements.
The total portfolio of derivatives at December
31, 2001 amounted to €1,883 million, with a positive
fair value of €1.6 million.
•Liquidity risk and liquidity management
Liquidity risk is the risk that necessary cash resources
cannot be provided in good time. The function of
liquidity management is to ensure sufficient liquidity
and to eliminate or reduce unexpected financial events
(financing and investment risk) for Deutsche Post
World Net.Adequate confirmed bank lines of credit
were available to the Group at the end of 2001 for
this purpose.
•Currency risk and currency management
Currency risk, i.e. potential losses in the value of
a financial instrument due to changes in exchange
rates, arise in particular where receivables and liabil-
ities are denominated in a currency other than the
company’s local currency.
Currency risk in the Group is hedged by using
currency forwards,currency options and currency
swaps. The reported volume of €61 million relating
to currency forwards and options is used to hedge
binding contracted future transactions relating to
the supply of goods and services.
Intragroup financing and investments in foreign
currencies are hedged using currency swaps with
matching amounts and maturities. The outstanding
volume at the balance sheet date was around €994
million. Measurement resulted in a negative fair value
of €8.8 million.
Cross-currency swaps with a notional amount
totaling €207 million eliminate the exchange rate risk
from long-term refinancing in foreign currencies.
The fair value at the reporting date was €12 million.
Fair value
2001
Carrying amounts/Fair values
Carrying amount
2001
in €m
Assets
Cash reserves 1,373 1,373
Receivables from banks 35,531 35,567
Receivables from customers 38,853 39,242
Provisions for risks -621 -621
Long-term investments 14,010 14,353
Liabilities
Due to banks 26,819 19,096
Due to customers 62,272 69,583
Securitized and subordinated liabilities 40,587 41,539